Ask yourself: would an iPhone 5 would get $500 on the open market? More likely it would be worth $100,000 or more. And if someone stole a $100,000 device of mine with a GPS device that was tracked to a residence, I would hope the SFPD would help me. Anything less would be a miscarriage of justice.
Now onto guilt, this person admitted he was at the bar from which the iPhone was allegedly stolen. Now while this might not be enough to convict someone in a court of law, it's certainly enough to investigate further.
I do not understand why this story is getting any traction except the standard internet hatreds for police and corporations.